What's in a Good Performance Review?
Leaving a performance review thinking “what the hell was that?” is an all too common experience. For a process that's supposed to drive clarity, accountability and growth, the performance review has a remarkable track record of doing the opposite.
The good news? It doesn't have to be that way! A well-structured review is one of the most powerful tools a business owner or leader has. It aligns people to expectations, surfaces problems early, recognises great work and sets the course for what comes next. Done right, it's not a box-ticking exercise. It's a genuine conversation that moves your business forward.
So what goes into a good performance review? One that has employees leaving feeling empowered and like they want to hang around for a while longer ;)
What Is a Performance Review?
A performance review (sometimes called a performance appraisal or staff review) is a structured conversation between a manager and an employee that evaluates performance over a set period – typically quarterly, biannually or annually.
It's a chance to look back at what's been achieved, address any gaps, and look forward to what's next. In small and medium businesses especially, it's also often one of the few structured touchpoints where an employee gets dedicated, uninterrupted time with their manager. That makes it worth getting right.
Why Do Businesses Do Performance Reviews?
From a business perspective, reviews create a formal record of performance, help identify who's ready to grow and who needs support, and give leaders a structured opportunity to address underperformance before it becomes a bigger problem.
From an employee perspective, reviews answer the questions that quietly eat away at people: Am I doing a good job? Do my efforts matter here? What does my future look like in this business?
When those questions go unanswered for too long, people disengage. Or they leave.
The performance review, at its best, is how you keep those questions answered.
What Does a Bad Performance Review Look Like?
Before getting into what good looks like, it's worth calling out what bad looks like – because undercooked performance reviews are more common than most leaders would like to admit.
A bad review is vague. It relies on general impressions rather than specific examples. It measures people against expectations that were never clearly communicated in the first place. It avoids the hard stuff entirely, or alternatively, it ambushes someone with feedback they've never heard before.
As Adam puts it: "If leaders avoid honesty all year and dump it into one meeting… that's not leadership."
A bad review is also one-sided. The manager talks, the employee nods, and nothing changes. There's no two-way conversation, no genuine interest in how the employee is feeling, and no meaningful plan for what happens next.
High performers (the people you most want to keep) notice all of this. And they draw their own conclusions about what it says about your leadership.
What Should a Good Performance Review Include?
A good review isn't just a conversation – it's a structured conversation. These are the five areas every review should cover (in our experienced opinions).
1. Clear Expectations
"People can't perform well if success has never been clearly defined." — Adam
You cannot hold someone accountable to standards they didn't know existed. Which means before any review conversation happens, you need to be honest about whether your team actually understood what was expected of them.
A good review revisits:
Role clarity: Does the employee understand their core responsibilities and where they sit in the business?
KPI expectations: What were the measurable targets, and were they communicated clearly at the outset?
Behaviour expectations: How someone does their job matters as much as what they deliver. Values, communication, collaboration all count.
What success actually looks like: Not just "meet your targets," but what excellent performance means in their specific role.
As Sharron notes: "One of the biggest frustrations for employees is being measured against expectations they never understood in the first place."
If expectations weren't clear going in, that's important information too, and it's worth acknowledging it rather than pretending otherwise.
2. Honest Feedback
"A good review shouldn't feel like an ambush." — Sharron
Honest feedback is the part most leaders get wrong – either by avoiding it entirely or by saving it all up for the annual review. Neither works.
Good feedback during a review is:
Timely: Built from conversations that have happened throughout the year, not dragged out of storage once a year
Specific: Grounded in real examples, not vague impressions ("In Q2, when the client project ran over, here's what I observed...")
Constructive: Focused on gaps and how to close them, not on making someone feel bad
Two-way: Giving the employee space to respond, push back or add context
The aim isn't to be brutal. It's to be useful. Feedback that's too soft to act on isn't kind, it just delays a problem.
3. Recognition and Validation
"People want to know their work matters." — Adam
This is the section that gets cut when reviews are rushed, and it's a mistake. Recognition isn't a nice-to-have, it's one of the most powerful drivers of engagement and retention.
A good review deliberately makes space to:
Acknowledge specific contributions and how they've impacted the business
Celebrate growth where someone has stretched themselves or developed a new skill
Recognise consistency. The people who just quietly do excellent work, week after week
Reinforce positive behaviour so people know what to keep doing
As Sharron says: "Recognition doesn't always need to be financial. Sometimes people simply want to feel seen."
An employee who leaves a review feeling genuinely valued is a very different person from one who leaves feeling assessed or scrutinized.
4. Accountability
"Good culture isn't built by avoiding hard conversations." — Sharron
Here's the one most leaders skip. Not because they don't know it matters, but because it's uncomfortable. And the longer it gets avoided, the worse it gets.
Accountability in a review means:
Directly addressing underperformance – naming it, not hinting at it
Being clear about behaviour standards and what needs to change
Establishing ownership – what the employee is responsible for going forward
Agreeing on follow-through – what will be different, and how you'll both know
Being honest about consequences when standards aren't met
As Adam puts it: "High performers get frustrated when poor performance gets ignored."
This is true, and it's important. When underperformance goes unaddressed, your best people notice. It signals that standards don't really matter and that the business tolerates mediocrity. Accountability, handled well, actually protects your culture.
5. Future Growth and Development
"The best reviews aren't just backward-looking — they're future-focused." — Adam
A review that only looks at what's happened is a missed opportunity. The most valuable part of the conversation is often what comes next.
This section should cover:
Career goals: Where does this person want to go? What does their future in the business (or beyond) look like?
Leadership capability: Are they ready for more responsibility? What would it take to get them there?
Skills development: What training, mentoring or experience would help them grow?
Future opportunities: What's on the horizon in the business that they might step into?
Succession planning: Who's being developed to take on bigger roles as the business grows?
Sharron's take is simple and accurate: "People stay longer when they can see growth ahead of them."
Retention isn't just about pay. People stay when they feel invested in – when there's a credible path forward and a leader who's genuinely interested in helping them get there.
How Do You Measure Employee Performance?
Measurement is only useful if what you're measuring was agreed on upfront. That means defining KPIs and behavioural expectations at the start of a review period, not reverse-engineering them at the end.
Useful measures might include:
Quantitative targets (revenue, output, deadlines met, error rates)
Qualitative indicators (client feedback, peer input, quality of work)
Behavioural evidence (how someone shows up, not just what they deliver)
Self-assessment (asking the employee to reflect on their own performance before the conversation)
A good review uses data and examples, not gut feel. That doesn't mean it becomes a spreadsheet exercise. Context matters, and numbers rarely tell the full story. But specificity is what separates a useful conversation from a vague one.
What Should the Outcomes of a Performance Review Be?
A review with no clear outcomes is just a conversation. Outcomes are what make change happen.
By the end of a good review, both parties should be clear on:
What's working and should continue
What needs to change with specific actions and a timeframe
Development priorities: what the employee is working toward
Any formal documentation. Especially where underperformance has been discussed
The next check-in: when you'll revisit progress
These outcomes should be written down. Not because you don't trust each other, but because clarity in the room has a habit of getting fuzzy over time. Documentation protects both parties and keeps the commitment alive.
A good performance review isn't a bureaucratic hurdle. It's a leadership tool and one of the clearest signals you send to your team about what kind of business you're building.
Clear expectations. Honest feedback. Genuine recognition. Accountability. A real investment in what comes next. Get those five things right, and a review becomes something people actually value rather than something they dread.
Prefer to listen? Our podcast episode covers performance, accountability and what great leadership actually looks like in practice. Find it on Spotify, Apple Podcasts and YouTube.